FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

                  For the quarterly period ended June 30, 2000
   --------------------------------------------------------------------------

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from ______________________ to _____________________


                             Commission file number
                                     0-21558
                     ---------------------------------------


                            CNL Income Fund XII, Ltd.
------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Florida                                          59-3078856
----------------------------------------           ----------------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)


450 South Orange Avenue
Orlando, Florida                                              32801-3336
----------------------------------------           ----------------------------
(Address of principal executive offices)                      (Zip Code)


Registrant's telephone number
(including area code)                                      (407) 540-2000
                                                   ----------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No _________





<PAGE>


                                    CONTENTS





Part I                                                                   Page

   Item 1.    Financial Statements:

                  Condensed Balance Sheets                                1

                  Condensed Statements of Income                          2

                  Condensed Statements of Partners' Capital               3

                  Condensed Statements of Cash Flows                      4

                  Notes to Condensed Financial Statements                 5-6

   Item 2.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     7-11

   Item 3.   Quantitative and Qualitative Disclosures About
                  Market Risk                                             11

Part II

   Other Information                                                      12-14















<PAGE>

                                                         1
                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>

<CAPTION>

                                                                    June 30,               December 31,
                                                                      2000                     1999
                                                                ------------------      -------------------
<S> <C>
                             ASSETS

Land and buildings on operating leases, less
    accumulated depreciation                                         $ 21,896,886             $ 20,780,828
Net investment in direct financing leases                              10,390,076               11,441,924
Investment in joint ventures                                            3,396,084                3,415,888
Mortgage note receivable                                                   46,686                   51,301
Cash and cash equivalents                                               1,714,155                1,870,366
Receivables, less allowance for doubtful accounts
    of $31,764 and $14,491, respectively                                   99,295                   80,791
Due from related parties                                                       --                    5,222
Prepaid expenses                                                           29,158                   13,552
Lease costs, less accumulated amortization
    of $8,814 and $6,142, respectively                                     53,609                   56,281
Accrued rental income, less allowance for doubtful
    accounts of $8,717 and $6,323, respectively                         2,817,894                2,724,774
                                                                ------------------      -------------------

                                                                     $ 40,443,843             $ 40,440,927
                                                                ==================      ===================

               LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                                     $     37,421             $    136,006
Accrued and escrowed real estate taxes payable                             19,590                   11,897
Distributions payable                                                     956,252                  956,252
Due to related parties                                                    163,536                   74,909
Rents paid in advance and deposits                                         39,491                   50,987
                                                                ------------------      -------------------
    Total liabilities                                                   1,216,290                1,230,051

Partners' capital                                                      39,227,553               39,210,876
                                                                ------------------      -------------------

                                                                     $ 40,443,843             $ 40,440,927
                                                                ==================      ===================




           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME


                                                               Quarter Ended                  Six Months Ended
                                                                 June 30,                         June 30,
                                                           2000            1999             2000             1999
                                                        ------------    ------------     ------------     ------------
Revenues:
    Rental income from operating leases                   $ 678,728       $ 629,748       $1,384,467      $1,234,632
    Earned income from direct financing leases              324,241         372,240          620,740         748,574
    Contingent rental income                                    947           2,311            1,714           4,682
    Interest and other income                                16,392          25,180           61,881          44,935
                                                        ------------    ------------     ------------     ------------
                                                          1,020,308       1,029,479        2,068,802       2,032,823
                                                        ------------    ------------     ------------     ------------

Expenses:
    General operating and administrative                     60,619          31,597          109,200          78,881
    Professional services                                     5,548          11,435           19,970          22,576
    Management fees to related party                         10,898          10,925           21,576          21,455
    Real estate taxes                                            --           1,371               --           3,496
    State and other taxes                                       131              --           20,834          20,764
    Depreciation and amortization                           101,375          84,071          198,656         168,777
    Transaction costs                                        30,882          92,263           77,277         127,682
                                                        ------------    ------------     ------------     ------------
                                                            209,453         231,662          447,513         443,631
                                                        ------------    ------------     ------------     ------------

Income Before Equity in Earnings of Joint
    Ventures and Gain on Sale of Land and
    Buildings                                               810,855         797,817        1,621,289       1,589,192

Equity in Earnings of Joint Ventures                         82,187         119,068          160,259         190,206

Gain on Sale of Land and Buildings                               --          74,714          147,633          74,714
                                                        ------------    ------------     ------------     ------------

Net Income                                                $ 893,042       $ 991,599       $1,929,181      $
                                                                                                           1,854,112
                                                        ============    ============     ============     ============

Allocation of Net Income:
    General partners                                       $  8,930        $  9,270         $ 17,815      $   17,895
    Limited partners                                        884,112         982,329        1,911,366       1,836,217
                                                        ------------    ------------     ------------     ------------

                                                          $ 893,042       $ 991,599       $1,929,181      $1,854,112
                                                        ============    ============     ============     ============

Net Income Per Limited Partner Unit                       $    0.2        $    0.22       $     0.42      $     0.41
                                                        ============    ============     ============     ============

Weighted Average Number of Limited Partner
    Units Outstanding                                     4,500,000       4,500,000        4,500,000       4,500,000
                                                        ============    ============     ============     ============


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                                       Six Months Ended           Year Ended
                                                           June 30,              December 31,
                                                             2000                    1999
                                                    -----------------------   --------------------

General partners:
    Beginning balance                                         $    259,109            $   223,305
    Net income                                                      17,815                 35,804
                                                    -----------------------   --------------------
                                                                   276,924                259,109
                                                    -----------------------   --------------------

Limited partners:
    Beginning balance                                           38,951,767             39,167,536
    Net income                                                   1,911,366              3,609,239
    Distributions ($0.43 and $0.85 per
       limited partner unit, respectively)                      (1,912,504 )           (3,825,008 )
                                                    -----------------------   --------------------
                                                                38,950,629             38,951,767
                                                    -----------------------   --------------------

Total partners' capital                                      $  39,227,553           $ 39,210,876
                                                    =======================   ====================


           See accompanying notes to condensed financial statements.
<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS


                                                                        Six Months Ended
                                                                            June 30,
                                                                    2000                 1999
                                                               ----------------     ---------------

Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                       $1,969,359          $1,837,011
                                                               ----------------     ---------------

    Cash Flows from Investing Activities:
       Proceeds from sale of land and buildings                        791,450             467,300
       Investment in joint venture                                          --            (135,825 )
       Additions to land and buildings on operating
          leases                                                    (1,009,067 )                --
       Collections on mortgage note receivable                           4,551                 706
                                                               ----------------     ---------------
              Net cash provided by (used in) investing
                  activities                                          (213,066 )           332,181
                                                               ----------------     ---------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                            (1,912,504 )        (2,047,504 )
                                                               ----------------     ---------------
              Net cash used in financing activities                 (1,912,504 )        (2,047,504 )
                                                               ----------------     ---------------

Net Increase (Decrease) in Cash and Cash
    Equivalents                                                       (156,211 )           121,688

Cash and Cash Equivalents at Beginning of Period                     1,870,366           2,362,980
                                                               ----------------     ---------------

Cash and Cash Equivalents at End of Period                          $1,714,155          $2,484,668
                                                               ================     ===============

Supplemental Schedule of Non-Cash Investing and Financing
Activities:

       Mortgage note accepted in exchange for sale of
          land and building                                                 --           $  55,000
                                                               ================     ===============

       Distributions declared and unpaid at end of
          period                                                     $ 956,252           $ 956,252
                                                               ================     ===============



           See accompanying notes to condensed financial statements.

</TABLE>


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2000 and 1999


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the quarter and six months ended June 30, 2000,  may not be  indicative
         of the results  that may be expected  for the year ending  December 31,
         2000.  Amounts as of  December  31,  1999,  included  in the  financial
         statements,  have been derived from audited financial  statements as of
         that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1999.

         Certain  items in the  prior  year's  financial  statements  have  been
         reclassified to conform to 2000 presentation.  These  reclassifications
         had no effect on partners' capital or net income.

2.       Land and Buildings on Operating Leases:

         Land and buildings on operating leases consisted of the following at:

<TABLE>

<CAPTION>
                                                        June 30,             December 31,
                                                          2000                   1999
                                                   -------------------    -------------------
<S> <C>
              Land                                        $ 12,672,797           $ 12,262,712
              Buildings                                     11,547,810             10,645,853
                                                   -------------------    -------------------
                                                            24,220,607             22,908,565
              Less accumulated depreciation                 (2,323,721 )           (2,127,737 )
                                                   -------------------    -------------------

                                                          $ 21,896,886           $ 20,780,828
                                                   ===================    ===================
</TABLE>


         Effective  January 1, 2000, the Partnership  amended the lease relating
         to its property in St. Ann, Missouri, to allow for a rent reduction. As
         a result,  the Partnership  reclassified  the building  portion of this
         asset from net  investment  in direct  financing  lease to  building on
         operating  lease. In accordance with statement of Financial  Accounting
         Standards No. 13, "Accounting for Leases," the Partnership recorded the
         reclassified  asset at the lower of original cost,  present fair value,
         or   present   carrying   value.   No   loss   was   recorded   on  the
         reclassification.


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2000 and 1999


2.       Land and Buildings on Operating Leases - Continued:

         In April 2000,  the  Partnership  reinvested  the net sales proceeds it
         received from the sale of the property in Cleveland,  Tennessee,  along
         with additional funds, in a Krystal property located in Pooler, Georgia
         (see Note 3). In connection  therewith,  the Partnership entered into a
         long term,  triple-net lease with terms  substantially  the same as its
         other leases.

3.       Net Investment in Direct Financing Leases:

         In  March  2000,  the  Partnership  sold  its  property  in  Cleveland,
         Tennessee,  for which the land and  building had been  classified  as a
         direct financing lease, for $806,460 and received net sales proceeds of
         $791,450,  resulting  in a gain of  $147,633  for  financial  reporting
         purposes. In connection therewith,  the gross investment (minimum lease
         payments  receivable  and the  estimated  residual  value) and unearned
         income  relating  to the  land  and  building  were  removed  from  the
         accounts.  This property was originally  acquired by the Partnership in
         December  1992  and had a cost  of  approximately  $622,800,  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for  approximately  $168,700 in excess of
         its original purchase price. In April 2000, the Partnership  reinvested
         the net sales  proceeds,  along  with  additional  funds,  in a Krystal
         property located in Pooler, Georgia (see Note 2).

4.       Termination of Merger:

         On March 1, 2000,  the general  partners  and CNL  American  Properties
         Fund, Inc.  ("APF") mutually agreed to terminate the Agreement and Plan
         of  Merger  entered  into in  March  1999.  The  general  partners  are
         continuing  to evaluate  strategic  alternatives  for the  Partnership,
         including alternatives to provide liquidity to the limited partners.

5.       Subsequent Events:

         In July 2000, the Partnership  sold its property in Bradenton,  Florida
         to an unrelated third party for approximately $1,227,900,  resulting in
         a gain of approximately $106,800 for financial reporting purposes.



<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  as well as Properties upon which  restaurants were to be
constructed  (the  "Properties"),  which are leased  primarily  to  operators of
national and regional  fast-food and family-style  restaurant chains. The leases
are generally  triple-net leases,  with the lessees  responsible for all repairs
and maintenance,  Property taxes, insurance and utilities.  As of June 30, 2000,
the Partnership owned 48 Properties,  which included interests in six Properties
owned by joint ventures in which the Partnership is a co-venturer.

Capital Resources

         The  Partnership's  primary  source of capital for the six months ended
June 30, 2000 and 1999 was cash from  operations  (which  includes cash received
from tenants,  distributions from joint ventures,  and interest and other income
received, less cash paid for expenses).  Cash from operations was $1,969,359 and
$1,837,011  for the six months ended June 30, 2000 and 1999,  respectively.  The
increase in cash from  operations  for the six months  ended June 30,  2000,  as
compared  to the six  months  ended June 30,  1999,  was  primarily  a result of
changes in income and expenses as described in "Results of Operations" below and
changes in the Partnership's working capital.

         Other sources and uses of capital included the following during the six
months ended June 30, 2000.

         During the six months ended June 30,  2000,  the  Partnership  sold its
Property in Cleveland,  Tennessee,  to a third party,  for $806,460 and received
net sales  proceeds  of  $791,450,  resulting  in a total gain of  $147,633  for
financial  reporting  purposes.  This  Property was  originally  acquired by the
Partnership  in  December  1992,  and  had a  cost  of  approximately  $622,800,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the Partnership  sold the Property for  approximately  $168,700 in excess of its
original purchase price. In April 2000, the Partnership reinvested the net sales
proceeds,  along with additional  funds, in a Property in Pooler,  Georgia.  The
transaction relating to the sale of the Property in Cleveland, Tennessee and the
reinvestment  of the net sales proceeds was structured to qualify as a like-kind
exchange  transaction for federal income tax purposes.  However, the Partnership
will distribute amounts sufficient to enable the limited partners to pay federal
and state income  taxes,  if any (at a level  reasonably  assumed by the general
partners), resulting from the sale.

         In July 2000, the Partnership  sold its Property in Bradenton,  Florida
to an unrelated third party for approximately $1,227,900, resulting in a gain of
approximately $106,800 for financial reporting purposes. The Partnership intends
to use the net sales proceeds to pay liabilities of the Partnership, to reinvest
in an additional Property or to distribute to the limited partners.

         Currently,  rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties,  pending  reinvestment in additional
Properties,  are invested in money market accounts or other  short-term,  highly
liquid  investments,  such as demand  deposit  accounts at commercial  banks and
certificates  of deposit  with less than a 30-day  maturity  date,  pending  the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions to the partners.  At June 30, 2000, the Partnership had $1,714,155
invested in such short-term  investments,  as compared to $1,870,366 at December
31, 1999. The funds remaining at June 30, 2000,  after payment of  distributions
and other  liabilities,  will be used to meet the Partnership's  working capital
and other needs.

Short-Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them  under  triple-net  leases to  operators  who meet  specified
financial standards minimizes the Partnership's  operating expenses. The general
partners  believe that the leases will  continue to generate cash flow in excess
of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         Total  liabilities of the  Partnership  decreased to $1,216,290 at June
30, 2000,  from  $1,230,051  at December  31,  1999,  primarily as a result of a
decrease in  accounts  payable  and rents paid in advance at June 30,  2000,  as
compared to December 31, 1999.  The decrease in liabilities at June 30, 2000 was
partially  offset by an increase in due to related  parties at June 30, 2000, as
compared to December 31, 1999. The general partners believe that the Partnership
has sufficient cash on hand to meet its current working capital needs.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of operating  expenses of the Partnership,  to the extent that
the general partners  determine that such funds are available for  distribution.
Based on current and, for the six months ended June 30, 1999, anticipated future
cash from  operations,  the Partnership  declared  distributions  to the limited
partners of  $1,912,504  for each of the six months ended June 30, 2000 and 1999
($956,252  for  each of the  quarters  ended  June  30,  2000  and  1999).  This
represents distributions for each applicable six months of $0.43 per unit ($0.21
per unit for each applicable quarter). No distributions were made to the general
partners  for the  quarters  and six  months  ended June 30,  2000 and 1999.  No
amounts  distributed  to the limited  partners for the six months ended June 30,
2000 and 1999 are  required to be or have been treated by the  Partnership  as a
return of capital for purposes of calculating  the limited  partners'  return on
their adjusted  capital  contributions.  The Partnership  intends to continue to
make distributions of cash available for distribution to the limited partners on
a quarterly basis.

Long-Term Liquidity

         The  Partnership  has no long-term  debt or other  long-term  liquidity
requirements.


<PAGE>



Results of Operations

         During the six months ended June 30, 1999,  the  Partnership  owned and
leased 43 wholly owned Properties (which included one Property sold in May 1999)
and during the six months ended June 30, 2000, the Partnership  owned and leased
43 wholly owned Properties  (which included one Property sold in March 2000), to
operators  of  fast-food  and  family-style  restaurant  chains.  In  connection
therewith,  during the six months ended June 30, 2000 and 1999, the  Partnership
earned $2,005,207 and $1,983,206,  respectively, in rental income from operating
leases and earned  income from direct  financing  leases from these  Properties,
$1,002,969 and $1,001,988 of which was earned during the quarters ended June 30,
2000 and 1999, respectively. The increase in rental and earned income during the
six months ended June 30, 2000 was primarily due to the fact that during the six
months ended June 30, 2000, the  Partnership  collected and recognized as income
approximately $55,600 in past due rental amounts relating to Long John Silver's,
Inc. which filed for bankruptcy  during 1998 and rejected the leases relating to
three of the eight  Properties it leased.  As of June 30, 2000, the  Partnership
had sold two of the  Properties  for which the leases had been  rejected and had
entered into a lease with a new tenant for the remaining  Property for which the
lease had been  rejected.  In  addition,  rental  and  earned  income  increased
approximately  $13,800 and $27,600  during the quarter and six months ended June
30, 2000, respectively, as compared to the quarter and six months ended June 30,
1999,  due to the  Partnership  recognizing  rental  income  on  this  re-leased
Property.  During 1999, Long John Silver's,  Inc.  assumed and affirmed its five
remaining  leases and the  Partnership has continued  receiving  rental payments
relating to these leases.  However, the increase in rental and earned income was
partially  offset by a decrease  of $7,200 and  $14,400  for the quarter and six
months ended June 30, 2000,  respectively,  due to the Partnership granting Long
John Silver's, Inc. rent concessions on three of the affirmed leases.

         The increase in rental and earned income was also partially offset by a
decrease of approximately  $17,500 and $23,000 during the quarter and six months
ended June 30,  2000,  respectively,  as a result of the sale of the Property in
Cleveland,  Tennessee in March 2000, as described in "Capital Resources." Rental
and earned income  increased  approximately  $25,500  during the quarter and six
months ended June 30, 2000 due to the  reinvestment of the net sales proceeds in
a  Property  in  Pooler,  Georgia  in  April  2000,  as  described  in  "Capital
Resources."

         The  increase  in rental and earned  income was  partially  offset by a
decrease of  approximately  $4,000 and $30,600 during the quarter and six months
ended June 30,  2000,  respectively,  as  compared to the quarter and six months
ended June 30,  1999,  due to the fact that  during the  quarter  and six months
ended June 30, 2000,  the  Partnership  established  an  allowance  for doubtful
accounts for past due rental amounts  relating to three Properties in accordance
with the Partnership's policy. No such allowance was recorded during the quarter
and six months ended June 30, 1999. The general partners will continue to pursue
collection  of past due rental  amounts  relating to these  Properties  and will
recognize such amounts as income if collected.

         The  increase  in rental and earned  income  during the quarter and six
months  ended June 30,  2000 was also  offset by a decrease in rental and earned
income of approximately $8,200 and $13,800,  respectively,  due to the fact that
the lease  relating to the Property in St. Ann,  Missouri was amended to provide
for rent  reductions  from January  2000 through the end of the lease term.  The
Partnership  does not  believe  that the rent  reductions  will have a  material
adverse effect on the results of operations of the Partnership.

         In addition,  during the six months  ended June 30, 2000 and 1999,  the
Partnership owned and leased six and five Properties,  respectively,  indirectly
through joint venture  arrangements.  In  connection  therewith,  during the six
months  ended  June 30,  2000 and 1999,  the  Partnership  earned  $160,259  and
$190,206,  respectively,  $82,187 and  $119,068  of which was earned  during the
quarters ended June 30, 2000 and 1999, respectively.  The decrease in net income
earned by joint  ventures was  partially due to the fact that during the quarter
and six months  ended June 30,  1999,  Middleburg  Joint  Venture,  in which the
Partnership owns an 87.54% interest, collected and recognized as income past due
rental  amounts  for which the  joint  venture  had  previously  established  an
allowance  for doubtful  accounts.  The  decrease in net income  earned by joint
ventures  during the  quarter and six months  ended June 30, 2000 was  partially
offset by an increase  due to the fact that in November  1999,  the  Partnership
reinvested  the net  sales  proceeds  from  the  1999  sale of the  Property  in
Morganton, North Carolina in Bossier City Joint Venture.

         Operating expenses,  including  depreciation and amortization  expense,
were  $447,513 and $443,631  during the six months ended June 30, 2000 and 1999,
respectively,  $209,453 and $231,662 of which were incurred  during the quarters
ended June 30, 2000 and 1999,  respectively.  The increase in operating expenses
during the six months ended June 30,  2000,  as compared to the six months ended
June 30,  1999,  was  partially  attributable  to, and the  decrease  during the
quarter ended June 30, 2000, as compared to the quarter ended June 30, 1999, was
partially  offset by an increase in  administrative  expenses for  servicing the
Partnership and its Properties.  In addition, the increase in operating expenses
during  the six  months  ended  June 30,  2000,  was  partially  due to, and the
decrease  during the quarter ended June 30, 2000,  was  partially  offset by, an
increase in  depreciation  expense  relating to the fact that subsequent to June
30,  1999,  the  Partnership  reclassified  the  leases  for its  Properties  in
Asheville,  North  Carolina and  Clarksville,  Tennessee  from direct  financing
leases to operating leases due to lease amendments. In addition, the increase in
operating  expenses  during the six months  ended June 30, 2000,  was  partially
offset by,  and the  decrease  during  the  quarter  ended  June 30,  2000,  was
partially due to, the fact that the Partnership  incurred less transaction costs
relating to the  general  partners  retaining  financial  and legal  advisors to
assist them in evaluating and  negotiating the proposed merger with CNL American
Properties Fund, Inc. ("APF") due to the termination of the proposed merger,  as
described below in "Termination of Merger."

         As a result of the sale of the  Property in  Cleveland,  Tennessee,  as
described  above in  "Capital  Resources,"  the  Partnership  recorded a gain of
$147,633 for financial  reporting  purposes during the six months ended June 30,
2000.  As a result of the sale of the Property in Morganton,  North  Carolina in
May 1999,  the  Partnership  recorded a gain of $74,714 for financial  reporting
purposes during the quarter and six months ended June 30, 1999.

Termination of Merger

         On March 1, 2000,  the  general  partners  and APF  mutually  agreed to
terminate the Agreement and Plan of Merger (the "Merger")  entered into in March
1999. The general partners are continuing to evaluate strategic alternatives for
the  Partnership,  including  alternatives  to provide  liquidity to the limited
partners.

Dismissal of Legal Action

         As described in greater detail in Part II, Item 1. "Legal Proceedings,"
in 1999,  two  groups of limited  partners  in several  CNL Income  Funds  filed
purported  class action  suits  against the general  partners and APF  alleging,
among other  things,  that the general  partners  had breached  their  fiduciary
duties  in  connection  with the  proposed  Merger.  These  actions  were  later
consolidated  into one action.  On April 25, 2000, the judge in the consolidated
action issued an order dismissing the action without prejudice,  with each party
to bear its own costs and attorneys' fees.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         No material  changes in the  Partnership's  market risk  occurred  from
December 31, 1999 through June 30, 2000. Information regarding the Partnership's
market risk at December  31, 1999 is included in its Annual  Report on Form 10-K
for the year ended December 31, 1999.


<PAGE>


                           PART II. OTHER INFORMATION


Item 1.    Legal Proceedings.

           On May 11, 1999,  four limited  partners in several CNL Income
           Funds served a derivative  and purported  class action lawsuit
           filed April 22, 1999  against the general  partners and APF in
           the  Circuit  Court of the Ninth  Judicial  Circuit  of Orange
           County,  Florida,  alleging that the general partners breached
           their fiduciary  duties and violated  provisions of certain of
           the CNL Income Fund partnership  agreements in connection with
           the proposed merger. The plaintiffs sought unspecified damages
           and equitable relief. On July 8, 1999, the plaintiffs filed an
           amended   complaint   which,   in  addition  to  naming  three
           additional  plaintiffs,  included  allegations  of aiding  and
           abetting and conspiring to breach fiduciary duties, negligence
           and  breach  of duty  of good  faith  against  certain  of the
           defendants and sought additional equitable relief. As amended,
           the caption of the case was Jon Hale, Mary J. Hewitt,  Charles
           A. Hewitt,  Gretchen M. Hewitt, Bernard J. Schulte,  Edward M.
           and Margaret Berol Trust,  and Vicky Berol v. James M. Seneff,
           Jr.,  Robert  A.  Bourne,  CNL  Realty  Corporation,  and  CNL
           American Properties Fund Inc., Case No. CIO-99-0003561.

           On June 22,  1999,  a limited  partner of  several  CNL Income
           Funds served a purported  class action lawsuit filed April 29,
           1999  against  the  general  partners  and  APF,  Ira  Gaines,
           individually  and on  behalf of a class of  persons  similarly
           situated,  v. CNL American  Properties  Fund,  Inc.,  James M.
           Seneff,  Jr., Robert A. Bourne,  CNL Realty  Corporation,  CNL
           Fund  Advisors,  Inc.,  CNL  Financial  Corporation  a/k/a CNL
           Financial Corp., CNL Financial  Services,  Inc. and CNL Group,
           Inc., Case NO. CIO-99-3796,  in the Circuit Court of the Ninth
           Judicial Circuit of Orange County, Florida,  alleging that the
           general partners  breached their fiduciary duties and that APF
           aided  and  abetted  their  breach  of  fiduciary   duties  in
           connection with the proposed merger.
           The plaintiff sought unspecified damages and equitable relief.

           On September  23, 1999,  Judge  Lawrence  Kirkwood  entered an
           order consolidating the two cases under the caption In re: CNL
           Income Funds  Litigation,  Case No. 99-3561.  Pursuant to this
           order,  the plaintiffs in these cases filed a consolidated and
           amended  complaint on November 8, 1999.  On December 22, 1999,
           the general  partners  and CNL Group,  Inc.  filed  motions to
           dismiss and motions to strike.  On December 28, 1999,  APF and
           CNL Fund Advisors,  Inc. filed motions to dismiss. On March 6,
           2000,  all of the  defendants  filed a Joint  Notice of Filing
           Form 8-K Reports and Suggestion of Mootness.

           On April 25, 2000,  Judge Kirkwood  issued a Stipulated  Final
           Order of  Dismissal of  Consolidated  Action,  dismissing  the
           action  without  prejudice,  with  each  party to bear its own
           costs and attorneys' fees.

Item 2.    Changes in Securities.   Inapplicable.

Item 3.    Default upon Senior Securities.   Inapplicable.

Item 4.    Submission of Matters to a Vote of Security Holders.   Inapplicable.

Item 5.    Other Information.     Inapplicable.

Item 6.    Exhibits and Reports on Form 8-K.

           (a)  Exhibits

                3.1     Affidavit and Certificate of Limited  Partnership of CNL
                        Income  Fund  XII,  Ltd.  (Included  as  Exhibit  3.2 to
                        Registration  Statement No. 33-43278-01 on Form S-11 and
                        incorporated herein by reference.)

                4.1     Affidavit and Certificate of Limited  Partnership of CNL
                        Income  Fund  XII,  Ltd.  (Included  as  Exhibit  3.2 to
                        Registration  Statement No. 33-43278-01 on Form S-11 and
                        incorporated herein by reference.)

                4.2     Amended and Restated Agreement of Limited Partnership of
                        CNL Income Fund XII,  Ltd.  (Included  as Exhibit 4.2 to
                        Form  10-K  filed  with  the   Securities  and  Exchange
                        Commission on April 15, 1993, and incorporated herein by
                        reference.)

                10.1    Management  Agreement  between CNL Income Fund XII, Ltd.
                        and CNL Investment  Company (Included as Exhibit 10.1 to
                        Form  10-K  filed  with  the   Securities  and  Exchange
                        Commission on April 15, 1993, and incorporated herein by
                        reference.)

                10.2    Assignment of Management  Agreement  from CNL Investment
                        Company to CNL Income Fund Advisors,  Inc.  (Included as
                        Exhibit 10.2 to Form 10-K filed with the  Securities and
                        Exchange  Commission on March 31, 1995, and incorporated
                        herein by reference.)

                10.3    Assignment of Management  Agreement from CNL Income Fund
                        Advisors,  Inc. to CNL Fund Advisors,  Inc. (Included as
                        Exhibit 10.3 to Form 10-K filed with the  Securities and
                        Exchange  Commission on April 1, 1996, and  incorporated
                        herein by reference.)

                27      Financial Data Schedule (Filed herewith.)


<PAGE>



           (b)  Reports on Form 8-K

                No reports on Form 8-K were filed during the quarter  ended June
                30, 2000.



<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 10th day of August, 2000.


                                    By:  CNL INCOME FUND XII, LTD.
                                         General Partner


                                         By: /s/JAMES M. SENEFF, JR.
                                             ----------------------------------
                                             JAMES M. SENEFF, JR.
                                             Chief Executive Officer
                                             (Principal Executive Officer)


                                         By: /s/ROBERT A. BOURNE
                                             ----------------------------------
                                             ROBERT A. BOURNE
                                             President and Treasurer
                                             (Principal Financial and
                                             Accounting Officer)